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Indonesia

Updated by Rachael Chadwick , Resya Kania , Tauvik Muhamad , Sinta Satriana , valérie schmitt , Sebastiano Snider , Gregoire Yameogo on 05.06.2017

 

Social security is a right for all Indonesian , according to the constitution , which mandates the extension of the system to all citizens. The social security reform agenda aims to gradually transform a system of scattered social insurance programmes (reserved mainly for civil servants and mainly employees in private corporations and large businesses) and some non-contributory programmes for the very poor, to an integrated and better coordinated social security system with universal coverage as mandated by the constitution. The 2004 National Social Security Law (Law No.40/2004 ) guarantees universal access to health care, and income protection in case of work injury, old age and death for the entire population, including foreign workers living in the country. This framework is supplemented by the provision of a severance payment mechanism for dismissed workers, under the 2003 Labour Law.

The progressive implementation of the reform agenda is however confronted with challenges identified during an Assessment Based National Dialogue for Social Protection in 2012 and involving key stakeholders and partners of the national social protection system : limitation of programmes’ coverage, limited access to social services (particularly in eastern parts of Indonesia), limited linkages between social protection programmes and employment services, almost no social security for workers in the informal sector, high social security evasion in the formal sector, data limitation and targeting issues, as well as issues of coordination and overlap among programmes.

The social Health insurance programme, administered by BPJS Kesehatan, is implemented since January 2014 and designed to be a universal healthcare programme (replacing the existing scattered program targeting specific groups). This scheme, which combines a contributory and a non-contributory components covers around 68% of the population  (176 millions members out of a population of 257 million as of June 2017) and is targeting universal coverage by 2019 according to the National Medium term plan 2015-2019. More than half of the participants to the scheme (those with the lowest income), are subsididized participants (tax-funded). 

Work injury, Death benefit and provident fund are mandatory for formal sector employees . A new pension scheme, implemented since July 2015, is applied to large and medium size enterprises while the corresponding schemes for civil servants and military personal will run separately and be merged by 2029. All these schemes (Except the pension scheme) are voluntary for informal economy workers resulting in a very low coverage of this category, which represent more than 53% of the workers (BPS, August 2014 data). It is estimated that 29.5 million formal economy workers (out of 53 million) and 1.3 million informal economy workers (out of 61 million) are covered by these insurance programmes, administered by BPJS Ketenagakerjaan.

The social assistance programmes include conditional cash transfer program for very poor households (Family Hope Programme PKH) covering 6 millions beneficiaries, subsidised rice for low-income households (Raskin program) and school aid programmes (providing support to schools and scholarship for students). These programmes are now being extended with budget reallocation from fuel subsidies cuts in 2015. However, as all conditional programmes , theses programmes do not escape the shortcomings of coverage errors (inclusion and exclusion errors).